Key Price Levels: March 24, 2009

Although the price action has been positive, prices have yet to clear prior key pivot points or resistance levels on a weekly closing basis.

Please review the methodology and the significance of the key price levels by clicking on this link.

A weekly cart of the S&P Depository Receipts (symbol: SPY) is shown in figure 1. The frenetic move on Monday was positive in so far as prices are back in the down channel, but the key pivot point (or resistance level) at 82.61 has yet to be taken out on a weekly closing basis. If this level is taken out, then prices will need to contend with resistance levels at 86.78, which is the upper channel line and the next key pivot level to the upside. As stated in this week's sentiment post, you will need to be nimble as I believe the majority of the price move is already behind us.

Figure 1. SPY/ weekly


A weekly chart of the Diamond Trusts (symbol: DIA) is shown in figure 2. The DIA will likely close the week above the November, 2008 lows at 74.50 (horizontal pink line). There is resistance at the lower channel line and prices have yet to close above the prior key pivot point at 82.64. This move in the DIA still "smells" of a bounce into resistance.

Figure 2. DIA/ weekly


Figure 3 is a weekly chart of the Power Shares QQQ Trust (symbol: QQQQ). The QQQQ is our best performer as prices have catapulted outside the upper channel line. A weekly close over the two upper pivots (at 30.33) would be considered a "breakout" in my book. The last "breakout" in early February was a fake out, but if this one "sticks", expect a melt up to $35 at the 40 week moving average.

Figure 3. QQQQ/ weekly

Figure 4 is a weekly chart of the i-Shares Russell 2000 Index (symbol: IWM). This is a similar scenario to the SPY as prices are back in the channel, yet prices have yet to close over the prior key pivot point at 42.48 on a weekly closing basis.

Figure 4. IWM/ weekly